I Was Hit With a 26.6% Texas Property Tax Penalty – What Now?
Did your July property tax penalty catch you off guard? You’re not alone. Once your Texas property taxes become delinquent, the combined penalties, interest, and collection fees can snowball. By July 1, you could already owe more than 26.6% on top of your original bill; the result of a 12% penalty that accrues through June, 11% in interest, and a 20% attorney collection fee added in July on the original balance and on the penalties/interest. If the debt remains unpaid, these charges can continue to rise, with total delinquency costs reaching as much as 48% within the first year.
If you’re unable to pay on time, it’s critical to take action before January 31, whether through your county tax office or a property tax lender like American Finance & Investment Company, Inc. (AFIC). Let’s look at how Texas property tax delinquency works and what you can do if you’ve been hit with a steep penalty.
When Are Property Taxes Considered Late?
In Texas, property taxes must be paid by January 31 each year. If payment isn’t received by the county tax assessor-collector’s office or online payment system by that deadline, the taxes are considered delinquent on February 1. From that point forward, the penalty applies automatically, and interest charges begin to accrue on the unpaid taxes.
What is the Biggest Property Tax Penalty of the Year?
The largest property tax penalty of the year hits on July 1. On this date, an additional 20% collection fee, often allocated for attorney fees, is added to your balance. As a result, July becomes the costliest month for delinquent Texas property taxpayers. To avoid this penalty, it’s crucial to pay the taxes in full or partner with a property tax loan provider like AFIC before July 1.
Why is the July Property Tax Penalty so High?
The July property tax penalty is one of the steepest charges a taxpayer can face. When taxes are delinquent, local governments incur legal and administrative costs to pursue collection. These costs are recovered directly from taxpayers through penalties outlined in state law. Understanding why this penalty exists can help you avoid delinquency and legal action.
It’s Mandated by the Texas Tax Code
Besides the other monthly penalties you pay for delinquent property taxes, there are two July increases in the Texas Tax Code, as explained by the Texas Comptroller of Public Accounts. It includes an accrued 12% that stops increasing in penalties and a collection penalty of up to 20% of total outstanding charges (inclusive of penalties and interest) on July 1st.
Taxing Authorities Use This Penalty to Pay Fees
The 20% collection penalty is earmarked to pay legal professionals, including attorneys and court fees. If the tax collector’s office hires outside counsel to enforce collection, those costs are passed on to the property owner. Even if a taxpayer submits a request to cancel a penalty, most tax collectors deny requests unless specific circumstances apply, such as non-receipt, incorrect routing numbers, or payment processing issues tied to online bill pay or the postal service.
If you’ve received a penalty notice and believe it was applied unfairly, you may submit a request for penalty cancellation, but keep in mind that the tax collector only has discretion to cancel penalties in very rare cases. Late payments due to transaction failures, incorrect account numbers, or delayed mail are typically not accepted unless supported with clear documentation, such as a mark stamped on the envelope or proof of online payment submission.
What Happens After the July Penalty?
Unfortunately, the July penalty is not the end of your challenges as a delinquent taxpayer. The penalties, interest, and collection fees keep increasing, and you might have your own legal fees to cover as the collection penalty’s purpose is to pay a law firm to pursue collection action against you.
Can Unpaid Property Taxes in Texas Lead to Foreclosure?
Yes. If left unpaid, delinquent property taxes in Texas can lead to foreclosure. Here’s how it can unfold:
- Texas counties can foreclose on a home for unpaid property taxes.
- After your account becomes delinquent, it could be sent to attorneys for legal collection.
- If unresolved, there’s a possibility that you could be sued and your property sold at auction.
- You could also have additional court costs, legal fees, and penalties added to your balance.
- Even after receiving a foreclosure notice, options may still be available.
AFIC can help you stop foreclosure by paying off the full amount due, including penalties and legal fees, and setting up a manageable repayment plan.
What Are Your Options?
Don’t be discouraged, it is possible to manage the high Texas property tax penalties you’ve been hit with. A reputable property tax loan provider can help immediately, as the debt should be cleared as soon as possible to cut down on penalties, interests, and fees. A trusted Texas property tax lender like AFIC can help you resolve your balance quickly and avoid further penalties.
How You Can Avoid Property Tax Penalties Without a Huge Payment
You know property tax penalties are adding up, but you may hesitate to contact a Texas property tax loan company because you’re unfamiliar with the product. AFIC can provide you with an instant quote and information by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits:
- Quick and completely online process
- No money down
- No credit check
- Free 30-day rate match
- Match competitors and beat their rate by 1%
- Avoid high penalties and foreclosure.
We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans, please contact our experienced team at AFIC today.
